Here’s how the special session is likely to end

There’s no certainty about how and when the special session of the New Mexico Legislature will end, but Wednesday’s action by the House and Senate makes the most likely path forward clear.

The Legislature will adjourn having voted to restore the funding for higher education and the Legislature that Gov. Susana Martinez vetoed in March. Lawmakers sent that bill to the governor on Wednesday, and it awaits her action.

Lawmakers also approved a complex bill that would use the state’s bonding ability to borrow as much as $100 million to plug the budget hole in the fiscal year that begins July 1. That money would have to be paid back over the next decade or two, so it’s essentially borrowing from the future. That legislation also awaits action by Martinez.

Before the session ends, which could happen as soon as Thursday, lawmakers are likely to send the governor some tax hikes, including legislation to raise the gas tax and tax internet sales. Martinez has repeatedly said she would consider comprehensive tax reform but not standalone hikes, and she’ll likely veto those proposals, as she did following the regular session in March.

Then there’s that massive legislation to reform the state’s complex gross receipts tax that is being pushed by Martinez and House Republicans — which the public finally saw for the first time on Wednesday. House Speaker Brian Egolf, D-Santa Fe, has already declared it dead. The bill is scheduled for a House committee hearing Thursday morning and will likely die there.

Which will make Martinez unhappy. And she has a veto pen.

What then?

The state’s revenue outlook for the fiscal year that begins July 1 has improved some. The budget hole isn’t as big as policymakers thought it was in March, when Martinez vetoed the funding for higher education and the Legislature. That creates some room to breathe.

So does the bill to borrow bond money, if Martinez signs it. The Albuquerque Journal reported that Martinez had been pushing for the bill.

Is that enough to balance the budget with higher education and legislative funding reinstated? Senate Finance Committee Chairman John Arthur Smith, D-Deming, thinks so. “We believe we’re in the black,” the Journal quoted him as saying.

But not by much. That would leave the state with essentially no money in reserves for the new fiscal year, at best, and could threaten New Mexico’s bond rating and impact its capacity to borrow money.

Still, that’s the most likely outcome of the current session. Then the question will be what Martinez does. Will she veto the tax increases as expected? Will she leave higher education and legislative funding reinstated — and allow the state to float along without reserves — or veto some or all of that funding a second time and continue to fight?

If Martinez vetoes again, the Legislative Council is likely to go back to the Supreme Court to seek an order overturning the governor’s vetoes with an argument that they are unconstitutional. The high court rejected such a petition earlier this month without ruling on its merits, saying there was still time for the legislative and executive branches to resolve their dispute without judicial intervention.

After this session, with the new fiscal year a few weeks away, the high court might see things differently.